The Reserve Bank of India (RBI) has issued updated Know Your Customer (KYC) norms to align with recent amendments to the Prevention of Money Laundering (Maintenance of Records) Rules. The updated guidelines, shared in a circular dated November 6, 2024, aim to revise certain existing instructions and ensure regulatory consistency.
Under the new provisions, regulated entities (REs) are required to conduct customer due diligence (CDD) procedures at the unique customer identification code (UCIC) level. This means that if a current KYC-compliant customer wishes to open another account or apply for additional services with the same institution, there will be no need for a new CDD process for customer identification.
Other key changes in the updated KYC norms include:
- Customer Acceptance Policy: The updated instructions specify that if an existing KYC-compliant customer wishes to avail additional products or services from the same financial institution, no fresh CDD procedure is necessary regarding customer identification.
- High-Risk Accounts: Clarifications have been made regarding the monitoring of high-risk accounts, with an emphasis on intensified scrutiny.
- Periodic KYC Updates: The term “periodic updation” has been added for better clarity in relation to periodic KYC updates.
- Uploading KYC Information: Regulated entities are now required to upload or update KYC records on the Central KYC Records Registry (CKYCR). Updated information must be shared with the CKYCR within seven days of receiving it from a customer. Institutions will be notified electronically when updates occur, and they are required to retrieve the new records from the CKYCR.
- KYC Reporting and Amendments: Adjustments have been made to reporting procedures for KYC information, particularly regarding the designation of the Central Nodal Officer for the Unlawful Activities (Prevention) Act, 1967, and other internal references in the KYC guidelines.
The KYC process is vital for financial institutions to verify customer identities, preventing illicit activities like money laundering and terrorist financing. Digital KYC, which may involve taking a live photo of the customer along with official identification documents, is part of the updated procedures where offline verification is not possible.
These updates aim to streamline customer identification processes while maintaining stringent safeguards against financial crimes.
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